Saber CEO: Embracer is not evil in the flesh, the Saudi fund really should have become a partner in the failed deal
Saber Interactive CEO Matthew Karch in an interview with GamesIndustry discussed the recently completed restructuring of the Embracer Group and the general condition of the Swedish holding company. We have collected the main theses.
- After the start of the restructuring in the summer of 2023, Embracer Group was hit by a lot of negativity due to mass layoffs, studio closures and game cancellations. According to Karch, the criticism was undeserved. Embracer Group did its best to keep as many people as possible.
- As an example, Karch cited downsizing at Gearbox Entertainment. Layoffs at the company took place only after it became known about its sale to Take-Two Interactive. Until that moment, the employees of Gearbox Entertainment remained in their places.
- "At GDC, we were congratulated right and left on leaving the evil Embracer. But these are the nicest people you've ever met. Lars Wingefors, head of the Embracer Group.— Ed.] there is a whole archive of video games. He loves games. He lives for games. He is not a typical businessman, although he wears a suit at an investor presentation," Karch said.
- Embracer Group began restructuring after the failure of the $2 billion deal. Karch confirmed that she was supposed to sign a contract with the Saudi fund Savvy Games Group. Earlier, this was reported by sources of the Axios publication.
- Karch believes that the Embracer Group has backed itself into a corner and did not really need this deal. However, the market was putting pressure on Embracer Group, pushing for constant and rapid growth, so the holding made a hasty decision.
- In addition, the Embracer Group had financial problems. Largely due to the purchase in March 2022 of Asmodee, a French publisher of board games. The deal cost 2.75 billion euros and drove the Embracer Group into debt. The Embracer Group was also affected by the unsuccessful releases of some games, including the relaunch of Saints Row.
- The deal with Savvy Games Group seemed to Embracer Group to be a good way out. Everyone in the holding was confident of a positive outcome and was preparing for changes.
- "Embracer has managed a number of companies that have concluded many deals: Saber, Gearbox, Crystal Dynamics, Eidos, THQ, Plaion. In a normal scenario, each of them would go about their business and make their own deals. But then there was an opportunity to sign a huge deal that would provide a serious cash flow and give more confidence," said Karch.
- The review of the deal with Savvy Games Group took much longer than planned. In anticipation of the deal, Embracer Group's subsidiaries suspended operations, which became another test for the holding.
- When the deal fell through, Embracer Group was forced to make significant changes to its business. However, the restructuring was complicated by the decentralized structure of the holding, consisting of 12 operational groups. Because of this, the process dragged on for almost a year.
- Karch stated that the Embracer Group would not have faced a number of problems if it were not a public company. The fact is that speculators tried to make money on the shares of the holding. They were playing down the value of securities.
- According to Karch's estimates, at the moment the total value of Embracer Group's assets is three to four times the market capitalization of the holding.
- "I wouldn't bet against Lars right now. He's really on top. I haven't seen him so confident in a long time. I think that Embracer Group has become a fairly compact company that is convenient to manage. It's all big, but it's much smaller. I know she's working on some great unannounced projects that people will like. So I'm confident in her too," Karch concluded.
